Local News

Tobacco Titans Craft Farmer Aid Package, React to Clinton's Threat

Posted January 19, 1999 6:00 a.m. EST

— In his "State of the Union" address, President Clinton said theJustice Departmentwould sue the tobacco industry for the cost of treating sick smokers. The lawsuit would be on top of the $246 billion the states have already won.

Tobacco leaders from several states gathered in Durham Wednesday to craft an aid package for tobacco farmers hurt by the $246 billion settlement. Now, they have another threat to worry about.

Very few people had any idea Clinton would announce the Justice Department lawsuit to recoverMedicaremoney. Word of the lawsuit sent shockwaves through an industry that has been battered in recent years.

"We will fight that lawsuit. We will fight it to the last day. The lawsuit does not have merit. It's based on popular political polls not the law," said Phil Carlton, tobacco industry representative.

Big tobacco, as expected, did not react favorably to the President's comments.

"We've tried our best to work with him, with the Congress, to negotiate a settlement of all the controversies surrounding tobacco, we're still prepared to do that. Unfortunately, the polls apparently show that suing tobacco companies is popular, so I guess Dick Morris has governed again in deciding his agenda. It's really a shame," said Carlton.

The meeting's focus is on the aid package. Early on there was some anticipation that a deal would be struck where the nation's four largest tobacco producers would create a $5 billion trust fund for farmers.

But those hopes were dashed whenR.J. Reynoldssaid it is sticking to its initial plan in which it will not pay into the trust fund.

"There are several problems with the trust fund. The primary one is we do not believe that it is the most effective way for dealing with the economic harm that might come to the tobacco communities and that the most effective way would be for everyone to join us and purchase more U.S. leaf," said Tommy Payne, R.J. Reynolds Vice President.

By late in the afternoon, the groups had agreed on one thing. They are going to meet Thursday to try to hammer out a deal.

If the $5 billion is put into this financial aid package for tobacco farmers, it could mean $2 billion to North Carolina.